Will Contactless Payments Catch On?


I just spent a week over in Scotland. Being overseas my preferred method of payment was credit card and I was super excited to learn that Scotland had Apple Pay. But just like in the U.S., Apple Pay is still not commonly offered as a payment option. The few places that we went in Scotland that did support Apple Pay were certainly not familiar with it. In fact, they looked at me paying for an item with double-tap of my Apple Watch like they had just witnessed some sort of miracle. So obviously Apple Pay adoption still has a ways to go.

So I got to thinking...is this normal for a new method of payment to take so long to catch on? It turns out that when compared to previous changes to payment methods, contactless payment methods like Apple Pay are catching on like wildfire. It's just that the whole payment ecosystem is slow to evolve. Take credit cards for example. The first credit card was issued in 1950, the MasterCharge (which eventually became MasterCard) was created in 1967. It wasn't until 1978 that credit cards became more mainstream (according to a Business Insider article). So from inception to wide-spread adoption it took credit cards 28 years. Apple Pay was made available by Apple on October 20, 2014 and just 21 months later Apple Pay usage has grown but it is still not common place to be able to pay with Apple Pay.

So what's going on? I think the answer is complicated. First, unlike credit cards, contactless payments require that you own a compatible device. A credit card company could send you a free piece of plastic in the mail and you were ready to go, but for payment methods like Apple Pay you must not only own a compatible device but you must also have a credit card or debit card that supports Apple Pay. Then there is the added complication of the switch to the whole "chip and signature" method for credit card transactions. This is forcing vendors to update their credit card machines and causing confusion for consumers who don't know which vendors are now accepting the "chip" method of credit card payment or the old "swipe" method.

The good news is that there is another change on the horizon that could give Apple Pay adoption and availability another shot in the arm and that is the new Apple Pay payment method that is coming out with Apple's new macOS Sierra operating system being released this Fall. If you are buying something online and running Safari in macOS Sierra then you can use your Apple Watch or your iPhone to pay. This is so much easier than entering in your credit card number not to mention significantly more secure. I think this added bit of convienance is going to start spoiling people, which is going to increase the consumer demand for an equally convienent and secure method of payment when paying for a service in-person. Combine this with consumer aggravation over the botched roll-out of "chip and signature" credit card payments and I think this will be the boost Apple Pay needs to accelerate into being more mainstream. Let's just hope it doesn't take 28 years like it did for credit cards...

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